Societe Generale isn’t scheduled to release it’s fiscal third quarter 2008 earnings until November 6, but the bank has been forced to mount an advertising campaign in the amidst of a stingy credit market and swirling rumors of insolvency. If the rumors prove unfounded, then they were probably triggered by the $10 billion capital injection into ING.
Societe Generale SA, France’s second-biggest bank by market value, fell to its lowest level in 5 1/2 years in Paris trading on speculation the lender may have to raise new capital.
The stock fell 1.37 euros, or 3 percent, to 43.93 euros, its lowest level since March 2003. The shares have lost 53 percent this year, slashing Societe Generale’s market value to 26 billion euros ($34.6 billion).
“Rumors of a capital increase persist,” Yann Azuelos, a fund manager at Meeschaert Asset Management in Paris, said in a phone interview today.
ING Groep NV, the biggest Dutch financial-services firm, will get a 10 billion euro lifeline from the Netherlands after mounting credit-market losses drove the stock to a 13-year low, the Amsterdam-based company said yesterday.
“The news on ING also is hurting Societe Generale today as well as the shares of other banks,” said Azuelos. BNP Paribas SA lost 6.2 percent to 52.46 euros, while Credit Agricole tumbled 2.7 percent to 10.20 euros.
Previously management guided the third quarter 1 billion euros ($1.35 billion) profit for the third-quarter and denies the rumors attributing significant losses in its structured products activities in recent days, which would require a recapitalization of the bank.
Societe Generale on Monday said it expects a third-quarter net income, excluding items, of 1 billion euros ($1.35 billion) and stressed that it had not experienced significant losses despite rumors circulating in the market. “At this time, the group has not experienced significant losses on its structured products activities, which would necessitate a recapitalization of any kind,” said Societe Generale in a statement. The French financial group also said it has reduced risky assets and have strengthened its hedging levels during the quarter and as of Sept. 30, its Tier One ratio, or its capital adequacy ratio, is over 8%. Societe Generale is scheduled to release third-quarter earnings Nov. 6.
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